by Hadley Malcolm, USA TODAY

by Hadley Malcolm, USA TODAY

With Saks Fifth Avenue and Lord & Taylor now under one roof, parent company Hudson's Bay is poised to reposition itself as a luxury powerhouse, retail experts say.

The $2.9 billion all-cash deal in which Canada-based Hudson's Bay acquired Saks brings several assets to the table, ones that all three brands stand to benefit from. For one, HBC gives Saks the capital it needs to reinvent its image, says Faith Hope Consolo, chairman of the retail group at Douglas Elliman real estate.

About one month after reports surfaced that Hudson's Bay was interested in buying Saks, the retailer said Monday it will pay $16 a share for the luxury department store. That's a 5% premium to the company's Friday closing price of $15.31. The stock closed Monday at $15.95

Saks' shares are up more than 50% this year.

"This exciting portfolio of three iconic brands creates one of North America's premier fashion retailers," Richard Baker, HBC's chairman and CEO, said in a statement.

Baker also emphasized that the acquisition is aimed at increasing the company's growth potential in the USA and Canada.

Hudson's Bay, which also operates Canadian department stores of the same name, will take over Saks' 41 stores in the USA, as well as 67 Saks Off 5th outlet stores. And the company plans to open Saks stores in Canada. HBC will now operate 320 stores total.

And HBC has the potential to leverage Saks' real estate locations for its other brands, Consolo says.

"The real estate is clearly a big play," she says. "If HBC wanted to merge into a Saks store, they don't have to get a new location, they don't have to negotiate a new deal, they own the lease."

The two companies put the deal's total value at about $2.4 billion, excluding $500 million in acquired debt. The buyout is targeted to close before year's end and requires shareholder approval.

Luxury retail was hit hard by the recession, and Saks was no exception, suffering from huge monthly sales declines. In 2009, sales were down by as much as 27.6% at one point. It has slowly recovered along with the economy. In the first quarter of 2013, sales at stores open at least a year were up 5.9%.

Still, Saks lost some its competitive edge in recent years, says Bertrand Pellegrin, director of b. on brand, a brand consulting group in San Francisco.

"The retail experience has fallen short over the past several years," he says. "It doesn't feel luxurious, with merchandise assortments that feel redundant with what's offered by other retailers."

Hudson's Bay's "deep pockets" may help fix this problem as early as this holiday season, though, Consolo says. Department stores skimped on inventory during the recession to reduce expenses and ensure they wouldn't be left with extra merchandise that would have to be sold at a discount, she says. Now Saks can build inventory back up.

"It's been the trend to keep a very lean inventory, but that's hurt them in the last two years because they weren't able to fulfill the need," Consolo says. "This will make for a more exciting holiday season (with) hopefully more sales for both Saks and Lord & Taylor. They're going to be the 800-pound gorilla on the street now."

The New York-based Saks has about 150.2 million outstanding shares, according to FactSet.